Friday, November 04, 2011

The World Bank has made it clear that for Malawi to start receiving budgetary support the Bingu wa Mutharika administration should address concerns about his political and economic leadership. The donors are concerned about threats to media freedom, governance, deteriorating human rights situations and the “shrinking political space”.

The lender, which is holding back $40 million in budget support, said Malawi should complete the International Monetray Fund (IMF) credit facility programme, to win back donor confidence.Sandra Bloemenkamp, the World Bank’s manager for Malawi said on Wednesday, addressing concerns raised by the donor community is key for Malawi to get back the aid.

Sandra Bloemenkamp: Address concerns

“The World Bank calls upon the government to Malawi to undertake these needed actions as an important first step towards the resumption of budget support,” a statement by Bloemekamp, who chairs a committee of the donors who normally account for 40% of Malawi’s budget, said.

International donors were also demanding Mutharika government to speed up an inquiry into a July crackdown on anti-government protests in which 20 demonstrators were killed and also an inquest on the death of pro-democrcay university student Robert Chasowa.

“The premium for further delays is increasing day by day and the impact will be severe on the most vulnerable groups,” the bank said.

However, on Wednesday the World Band signed with Malawi government the financing agreements for five new investment and technical assistance projectsthat will seek to support Malawi’s fight against poverty.

The lender said the projects ratified by Malawi parliament and approved by the bank’s board, would be largely designed to improve the livelihoods of Malawian households and businesses.

“In the absence of budget support, the value and timing of project financing is particularly important to Malawi,” the bank said.

The support will help improving access to reliable water and technical assistance projects to the mining sector, to improve transparency and sustainability in the management of the mining sector.

The aid freeze started earlier this year with a diplomatic spat with Britain, Malawi’s biggest donor, caused by a leaked diplomatic cable that labelled Mutharika “autocratic and intolerant of criticism”.

Washington joined in after the July violence, suspending a $350m project to upgrade the impoverished, land-locked state’s decrepit electricity grid.

Combined with a collapse in revenues from tobacco, Malawi’s main foreign exchange earner, the aid embargo has triggered an acute dollar shortage, putting pressure on the kwacha currency and hitting imports of basics such as food and fuel.

Petrol stations are frequently dry, and when they do have fuel, motorists are forced to queue for hours to fill up.

The hardship in evidence on the streets is in stark contrast to the official statistics, which suggest which suggest that Malawi has been among the world’s fastest-growing economies in the last six years.

Much of that performance has been based on a fertiliser subsidy scheme for farmers, although the aid freeze has also thrown that programme into doubt.—(Additional reporting by Reuters) 7

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